Deutsche Bank, A Scandalous History

Out of the numerous instances when Deutsche Bank was in the news due to its actions and why we have discussed a few of them below.

Deutsche Bank In The News

headquartered in Frankfurt, Germany, Deutsche Bank AG (NYSE: DB), a global multinational investment bank and financial services company, is spread across 58 countries. It is one of the world’s ten largest banks by asset and also the bank for derivatives trading.

Deutsche Bank over the past years has been involved in many situations or issues that has landed the bank’s image in a soup.

The IMF was one of the first to warn that DB can be the largest net contributor to systematic risks to the global financial system. It said that when Deutsche would collapse the rest of the system will be shaken and it would collapse.

In 2018, Deutsche bank offices were searched post contentions of facilitating and failing to report money laundering. Prosecutors assumed that the bank helped customers transfer money from criminal activities to tax havens.

With numerous curiosities on the bank, share price of DB currently stands at €6.14 from €90 before the 2007-2008 financial crisis. As per a Financial Times reported, Deutsche is facing almost 7,000 regulatory actions and lawsuits.

Deutsche Bank In The News For Laundering Russian Money

Between the period 2011 – 2015, Deutsche Bank did a mirror trading scheme in which it moved $10 billion out of Russia through its Moscow, London and New York offices. In 2017, the New York and U.K. authorities fined the bank almost $630 million for this act and also it was required to retain an independent monitor to review its internal compliance measures.

Under the scheme, clients apparently purchased Russian blue chip stock trades, valued between $2 million to $3 million, in rubles in Moscow. Shortly they sold these stocks at the same price through the bank’s New York operations with payment in U.S dollars.

Libor Interest Rate Scam

In 2016, Deutsche Bank was charged with a hefty $2.5 billion fine by U.S. and British authorities for its involvement in manipulating Libor interest rates between the period 2003-2007. Also, the bank said that it would terminate and ban almost 29 bank employees who were involved in the scam while seven employees, including directors and vice-presidents, were to be fired as directed by U.S. regulators.

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Meanwhile, Switzerland’s UBS and Britain’s Barclays were also involved in the scandal and they paid $1.5 billion and $453 billion respectively in global settlement in 2012. DB was charged higher as it misled the regulator, which could have hampered its investigation.

Role in Malaysia Scandal Brings Deutsche Bank In The News

It was known in 2019 that federal prosecutors are looking into Deutsche Bank’s role in Malaysia’s multi-billion dollar fraud scandal. The scheme looted a Malaysian government state infrastructure fund 1Malaysia Development Berhad (1MDB). The authorities are checking if the bank breached foreign corruption or anti-money laundering laws in its work with Malaysia’s sovereign wealth fund.

In 2014, Deutsche had helped 1MBD raise $1.2 billion out of which more than $850 million was allegedly diverted by conspirators as stated by U.S. prosecutors. Meanwhile, a total of $4.5 billion from the fund was misused to buy jewellery, fine art and real estate, as well as to fund bribes and kickbacks to foreign officials.

Violation of U.S economic sanctions

Carrying out business with U.S -sanctioned countries like Iran and Syria made Deutsche Bank pay $258 million in fine. It would install independent monitor and fire six employees involved in the transactions.

Between 1999 to 2006, the bank hid 27,200 dollar-clearing transactions valued at more than $10.86bn to skirt US sanctions. The transactions were with customers like Iranian, Libyan, Myanmar, Syrian and Sudanese entities. The bank said in a statement that it terminated all business with parties from the countries involved.

Actions Leading Up To The Financial Crisis

In order to resolve a U.S. investigation into its residential mortgage-backed securities dealings, Deutsche Bank agreed to pay a $7.2 billion fine. The bank’s dealings and other activities during 2005-2007 was one of the reasons contributing to the U.S. housing market collapse.

Relationship With Trump Highlights Deutsche Bank In The News

In his recent book, Dark Towers: Deutsche Bank, Donald Trump, and an Epic Trail of Destruction, David Enrich has highlighted how Deutsche became the last major financial institution willing to lend to Donald Trump’s repeatedly defaulting business empire. President Trump’s relationship with the bank has been under public and regulatory scrutiny since his first months in office.

Some of the issues highlighted are – Trump’s tax returns, favors from Trump to the bank, special purpose vehicles for hiding his financial information, inflated worth.

In April 2020, the German bank refused to provide any information about their dealings with President Donald Trump to U.S. senators. Trump’s hotels, golf courses and other properties have DB as one of its largest creditors.

Senators have expressed concerns that the bank is likely to give family preferential treatment on loan repayments amid the COVID-19 pandemic as Deutsche remains under investigation by the U.S. Department of Justice

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